Help Your Parents With Their Taxes
Tax time is a drag for all of us, but it can be especially worrisome to seniors. Many retirees find the process of wading through receipts and compiling statements more stressful than they once did.
Adult kids, offer to help your folks with their taxes. They can always say, "no thanks," but they'll probably appreciate your concern. And you might just learn something useful. "Helping with the return gives the parent a sense of comfort, and it's an entrée for the adult child to get a sense of what's going on with their parents' finances," says Barbara Kogen, CPA, a partner with the firm NSBN LLP in Beverly Hills, California. Organizing tax documents might open the door for other difficult conversations -- about estate planning, end-of-life decisions, or just where that darn key to the safe deposit box is.
So ask: Do you want me to go to the accountant with you this year? Would it help you if I organized your tax paperwork? Have you gotten all statements in the mail that you need to complete your return?
Here Kogen reviews a few tax scenarios that the seniors she works with frequently encounter:
- To start deducting medical expenses, medical and dental costs have to exceed 7.5% of adjusted gross income. If it's possible to plan ahead for medical care, encourage Mom or Dad to aggregate procedures into one year so they can take the deduction. And if your parent is paying for medical bills on a credit card, they get to deduct them in the year they make the charge, not the year they pay the bill off, Kogen says.
- When compiling medical expenses, don't forget to include things like parking fees at doctor's offices and mileage for traveling there (16.5 cents per mile). The pharmacy can print out a list of prescription drugs payments your folks racked up during the year. Seniors can also deduct a portion of the premiums they pay for long-term care insurance.
- A lot of seniors have annuities they purchased with after-tax dollars. The income is not always 100 percent taxable, Kogen says. In fact, portions can be excluded, so call it to the tax preparation expert's attention.
- Volunteers can deduct their mileage and out-of-pockets costs for working for a nonprofit. "I know a lot of seniors who are very active with charities, they go to national conventions, and they pay for themselves, so that's also deductible," Kogen says.
- Not a happy thought, but one not to miss: A widow or widower can still file a joint return for the year that their spouse died. "If a spouse passed away in January or February of 2010, as of December 31st, they're still considered married and still can benefit from that status," Kogen says.
Photo courtesy Flickr user Christopher Holden, CC 2.0
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